Government Announcements Reflect AIHA Calls for Action
Federal Minister of Finance Bill Morneau released his fall economic update titled, “Investing in Middle Class Jobs” on October 22. Some of the key provisions in the Economic Update are consistent with recommendations made by Alberta’s Industrial Heartland Association to the Federal Government, including our recommendations that the Government :
- Make changes to Canada’s tax system, as follows:
- Allow businesses to immediately write off the cost of machinery and equipment used for manufacturing or processing of goods. The immediate expensing will apply to qualifying assets acquired after November 20, 2018, and will be gradually phased out starting in 2024 through to 2027.
- Allow businesses to immediately write off the full cost of specified clean energy equipment. The immediate expensing will apply to qualifying assets acquired after November 20, 2018, and will begradually phased out starting in 2024 through to 2027.
- Introduce an accelerated capital cost allowance for businesses of all sizes. The accelerated capital cost allowance will apply to qualifying assets acquired after November 20, 2018, and will be gradually phased out starting in 2024 through to 2027.
- Enhance the Strategic Innovation Fund, providing an additional $800 M over five years that will continue to support innovative investments across the country.
- Conduct a review of the existing legislation that governs how federal departments and agencies craft regulations, with an intent to include “competitiveness considerations” when drawing up rules.
In general, the Government of Canada is recognizing the competitiveness issues in Canada relative to the U.S., and is making an effort to close the gap.
The Federal Government’s announcement comes on the heels of an announcement by Alberta Premier Notley, who announced that her Government will increase the funding for the Petrochemical Diversification Program from $500 million in royalty credits to $1.1 billion, as well as increase the grants/loan guarantees under the Petrochemical Feedstock Infrastructure Program from $500 million to $1 billion, citing strong interest from investors (23 applicants) in the programs.
These announcements are welcome news for Alberta’s Industrial Heartland Association and reinforce the messaging that our Association has been delivering to government consistently in partnership with our strategic stakeholder partners. “Alberta’s Industrial Heartland Association, along with our strategic advocacy partners, worked extensively over the last 12 months to impress upon the federal government the critical importance of identifying meaningful incentives that enhance Canada’s competitiveness on the world market. We are glad to see the federal government heard our calls for action and included provisions in their Fall Economic Update, ” says Executive Director Mark Plamondon.
“In particular, the government’s commitment to increasing the capital cost allowance for specific capital assets (such as machinery and equipment) that will allow up to 100 percent tax deductibility will support investment here at home. We are also encouraged to see the focus put on increasing the Strategic Investment Fund to $800 million, a measure that is sure to catch the eye of potential investors in Alberta’s Industrial Heartland. These steps, coupled with the provincial government’s announcement to increase in dollars earmarked for the Petrochemicals Diversification Program and the Petrochemical Feedstock Infrastructure Program, send a strong signal to investors that the governments of Canada and Alberta are focused on diversifying our energy economy and enhancing our competitiveness. Both the federal and provincial government announcements over the last two days are expected to have a significant positive impact on investment in Alberta’s Industrial Heartland. ”